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Management by objectives is not a technique of performance appraisal, but it denotes a systematic process of performance appraisal." Explain
Management by objective
An effective management goes a long way in extracting the best out of employees and make them work as a single unit towards a common goal.
Management by Objective is a process of setting objectives in the organization to give a sense of direction to the employees is called as Management by Objectives.
It refers to the process of setting goals for the employees so that they know what they are supposed to do at the workplace. Management by Objectives defines roles and responsibilities for the employees and help them chalk out their future course of action in the organization. Management by objectives guides the employees to deliver their level best and achieve the targets within the stipulated time frame.
The Management by Objectives process helps the employees to understand their duties at the workplace.
KRAs are designed for each employee as per their interest, specialization and educational qualification.
The employees are clear as to what is expected out of them.
Management by Objectives process leads to satisfied employees. It avoids job mismatch and unnecessary confusions later on.
Employees in their own way contribute to the achievement of the goals and objectives of the organization. Every employee has his own role at the workplace. Each one feels indispensable for the organization and eventually develops a feeling of loyalty towards the organization. They tend to stick to the organization for a longer span of time and contribute effectively. They enjoy at the workplace and do not treat work as a burden.
Management by Objectives ensures effective communication amongst the employees. It leads to a positive ambience at the workplace.
Management by Objectives leads to well defined hierarchies at the workplace. It ensures transparency at all levels. A supervisor of any organization would never directly interact with the Managing Director in case of queries. He would first meet his reporting boss who would then pass on the message to his senior and so on. Every one is clear about his position in the organization.
The MBO Process leads to highly motivated and committed employees.
The MBO Process sets a benchmark for every employee. The superiors set targets for each of the team members. Each employee is given a list of specific tasks
Advantages of Management By Objectives MBO :-
Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor management by crisis. Managers are expected to develop specific individual and group goals, develop appropriate action plans, properly allocate resources and establish control standards. It provides opportunities and motivation to staff to develop and make positive contribution in achieving the goals of an Organisation.
Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals that identify desired/expected results. Goals are made verifiable and measurable which encourage high level of performance.
They highlight problem areas and are limited in number. The meeting is of minds between the superior and the subordinates. Participation encourages commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic objectives is me benefit of M[BO.
Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance since goals are jointly set by superior and subordinates. The individual is given adequate freedom to appraise his own activities. Individuals are trained to exercise discipline and self control. Management by self-control replaces management by domination in the MBO process. Appraisal becomes more objective and impartial.
Raises employee morale: Participative decision-making and two-way communication encourage the subordinate to communicate freely and honestly. Participation, clearer goals and improved communication will go a long way in improving morale of employees.
Performance appraisalÂ is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal isÂ measuring and improvingÂ the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does
According to Flippo, a prominent personality in the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee's excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way ofÂ reviewingÂ and assessing the performance of an employee during a given period of time and planning for his future.
It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals.
By focusing the attention on performance, performance appraisal goes to the heart of personnel managementÂ and reflects the management's interest in the progress of the employees.
Objectives of Performance Appraisal
Performance Appraisal can be done with following objectives in mind:
To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
To identify the strengths and weaknesses of employees to place right men on right job.
To maintain and assess the potential present in a person for further growth and development.
To provide a feedback to employees regarding their performance and related status.
To provide a feedback to employees regarding their performance and related status.
It serves as a basis for influencing working habits of the employees.
Performance management practices can have a positive influence on the job satisfaction and employee loyalty by:
Regularly providing open and transparent job feedbacks to the employees.
Establishing a clear linkage between performance and compensation
Providing ample learning and development opportunities by representing the employees in leadership development programs, etc.
Evaluating performance and distributing incentives and rewards on a fair and equated basis.
Establishing clear performance objectives by facilitating an open communication and a joint dialogue.
Recognizing and rewarding good performance in an organization.
Providing maximum opportunities for career growth.
The systematic process of MBO as a performance appraisal technique is as follows -
1. Central goal setting:Â defining and verifying organizational objectives is the first step in MBO process. Generally these objectives are set by central management of the organization but it does so after consulting other managers. Before setting of these objectives, an extensive assessment of the available resources is made by the central management. It also conducts market service and research along with making a forecast. Through this elaborate analysis, the desired long run and short run objectives of the organization are highlighted. The central management tries to make these objectives realistic and specific. After setting these goals it is the responsibility of the management that these are known to all members and are also under stood by them.
2. Development and individual goal setting :Â After organization objectives are established by the central management, the next step is to establish the department goals. The top management needs to discuss these objectives with the heads of the departments so that mutually agreed upon objectives are established. Long range and short range goals are set by each department in consultation with the top management. After the department goals are established, the employees work with their managers to establish their own individual goals which relate with the organization goals. These participative goals are very important because
3. Revision of job description :Â In the process of MBO resetting individual goals involves a revision of job description of different positions in the organization which in turn requires the revision of the entire structure of the organization. The organization manuals and charts may also have to be modified to portray the changes that have been introduced by the process of MBO. The job description has to define the objectives, authority and responsibility of different jobs. The connection of one job with all other jobs of the organization also needs to be established clearly.
4. Matching goals :Â The establishment of objectives can not be fruitful unless the resources and means required to achieve these objectives are provided. Therefore the subordinates should be provided required tools and materials which enables them to achieve the objectives efficiently and effectively. Resource requirements can be measured precisely if the goals are set precisely. This makes the process of resource allocation relatively easy. Resource allocation should be made after consulting the subordinates.
5. Freedom implementation:Â The task team of manager and his subordinates should be given freedom in deciding the way to utilize their resources and the way to achieve their objectives. There should be very little or no interference by the seniors as long as the team is working with in the framework of organization policies.
6. Establishing check points:Â The process of MBO requires regularly meetings between the managers and their subordinates to discuss the progress achieve in the accomplishment of the objective established for the subordinates. For this purpose the mangers need to establish the standards of performance or check points to evaluate the progress of their subordinates. These standards need to be specified as for as possible quantitatively and it should also be ensured that these are completely understood by the subordinates. This practices needs to be followed by all managers and these should lead to an analysis of key results has the targets are represented in terms of the results. The analysis of key results should be recorded in writing and it generally contains information regarding :
(i) The overall objectives related with the job of subordinates.
(ii) The key results which must be achieved by the subordinate to fulfill his objectives.
(iii) The long term and short term priorities, a subordinate needs to adhere to.
(iv.) The extent and scope of assistance expected by a subordinate from his superior and other departmental managers and also the assistance, the subordinates is required to extend to other departments of his organizations.
7. Performance appraisal :Â An informal performance appraisal is generally conducted in routine by the manager, a periodic review of performance of the subordinates should also be conducted. Periodic reviews are required as the priorities and conditions change constantly and need to be monitored constantly. These reviews help the mangers as well as the subordinates to modify the objectives or the methods whenever require. This significantly increases the chances of achieving the goals and also ensures that no surprises are found at the time of final appraisal. Periodic performance appraisal needs to be based on measurable and fair standards so that these are completely understood by the subordinates and there are also aware of the degree of performance required at each step.
8. Counseling :Â Periodic performance review helps the subordinates in improving his future performance.